The controller of Rather Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs. January February March April May June July August September October November December (a) Total Electricity Costs $2,500 Fixed-costs 3,000 3,600 4,500 3,200 4,900 4,100 3,800 5,100 4,200 3,300 5,860 Your answer is incorrect. $ Total Machine Hours Variable-costs $ 300 350 500 690 400 700 650 520 680 630 Determine the fixed- and variable-cost components using the high-low method. 350 720

The controller of Rather Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs. January February March April May June July August September October November December (a) Total Electricity Costs $2,500 Fixed-costs 3,000 3,600 4,500 3,200 4,900 4,100 3,800 5,100 4,200 3,300 5,860 Your answer is incorrect. $ Total Machine Hours Variable-costs $ 300 350 500 690 400 700 650 520 680 630 Determine the fixed- and variable-cost components using the high-low method. 350 720

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

The controller of Rather Production has collected the following monthly expense data for analyzing the cost behavior of electricity
costs.
January
February
March
April
May
June
July
August
September
October
November
December
(a)
Total
Electricity Costs
$2,500
Fixed-costs
3,000
3,600
4,500
3,200
4,900
4,100
3,800
5,100
4,200
3,300
5,860
Your answer is incorrect.
$
Total
Machine Hours
Variable-costs $
300
350
500
690
400
700
650
520
680
630
Determine the fixed- and variable-cost components using the high-low method.
350
720

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Thane Company is interested in establishing the relationship between electricity costs and machine hours. Data have been collected and a regression analysis prepared using Excel. The monthly data and the regression output follow: Month Machine Hours Electricity Costs January 2,500 $ 18,400 February 2,900 21,000 March 1,900 13,500 April 3,100 23,000 May 3,800 28,250 June 3,300 22,000 July 4,100 24,750 August 3,500 22,750 September 2,000 15,500 October 3,700 26,000 November 4,700 31,000 December 4,200 27,750 Summary Output Regression Statistics Multiple R 0.965 R Square 0.932 Adjusted R2 0.925 Standard Error 1,425.18 Observations 12.00 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 3,726.88 1,682.82 2.21 0.05 (22.69) 7,476.45 Machine Hours 5.77 0.49 11.7 0.00 4.67 6.87 The percent of the total variance that can be explained by the regression is:…
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